A RASHID Vs. INCOME TAX OFFICER
LAWS(IT)-1985-4-18
INCOME TAX APPELLATE TRIBUNAL
Decided on April 26,1985

Appellant
VERSUS
Respondents

JUDGEMENT

K.B. Menon, Judicial Member - (1.)THIS appeal by the assessee relates to the assessment year 1979-80, for which the previous year ended on 31-3-1979.
(2.)The assessee, who is a native of Indore, owned a building in Indore jointly with his mother and sister. The ground floor of the building was let out up to 31-3-1978. It was vacant throughout the accounting period relevant to the assessment year under appeal. The first floor was occupied by the mother of the assessee. As the assessee was employed in Kerala and was also residing in Kerala, he had not occupied the first floor along with his mother during the relevant accounting period. The assessee could, therefore, have claimed total exemption under Section 23(3) of the Income-tax Act, 1961 ('the Act') with regard to the assessee's share of the annual value of the first floor. But the assessee returned Rs. 583 as the assessee's share in the- notional income of the first floor. He did not return any notional income from the ground floor as the same had not been let out during the accounting period.
The original assessment was completed on 20-2-1980 wherein the income returned by the assessee for the first floor, hereinafter referred to as the self-occupied portion, was accepted. No income was included as regards to the ground floor. This assessment was reopened under Section 147 of the Act, on the ground that the ground floor did not qualify for vacancy allowance as it had not been let out during any portion of the accounting period, in the light of the decision of the Supreme Court in Liquidator of Mahamudabad Properties (P.) Ltd. v. CIT [1980] 124 ITR 31 and that income had, therefore, escaped assessment. In the reassessment, the ITO included Rs. 834 as the income from self-occupied property and Rs. 3,740 as the income from the ground floor, which was described in the assessment order as the let out property. The ITO had declined to accept the annual letting value as fixed by the municipality.

(3.)THE AAC held that as far as self-occupied portion is concerned, the ITO should have determined the annual letting value as fixed by the municipality and that the income from this portion should, therefore, be taken as Rs. 583 as returned by the assessee. With regard to the ground floor, the AAC held that the assessee's claim for vacancy allowance under Section 24(1)(ix) of the Act is not sustainable in the light of the decision of the Supreme Court in the case of Liquidator of Mahamudabad Properties (P.) Ltd. (supra). He held that the assessee was eligible for vancancy allowance only if the ground floor had been let out at least for a portion of the accounting period. (THE reference by the AAC to the ground floor as the residential portion and the first floor as the let out portion is a mistake). Aggrieved by the same, the assessee has come up in appeal.


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